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Tuesday, September 7, 2010

SS to Pay $100(s) of Billions to Illegal Workers

I wrote a blog recently regarding a comment made to the WaPo by Steve Goss, the boss at the SSTF. Goss confirmed that as of 2007 SS had collected as much as $240b from undocumented workers. That blew my mind. I knew there had to be money, big money. But I did not think it could be that high. The number has grown since 2007, and the whole ball of wax is earning interest. So where is this money going to go? I’ll refine the issue:

Assume: A person comes illegally to the US and illegally obtains a fake SS and using that fake # finds work. This person stays in the US continuing to work illegally for many years. During that period this person has SS payroll taxes deducted from their paycheck. This person returns to (Mexico) and at age 62 applies for SS retirement benefits.

Question: Is this person entitled to receive benefits? If so what are the conditions for payment?

Well, I got this wrong. So did all the people I asked (including a lawyer). How about you? The answer is that an illegal worker using an illegal SSN has the same rights to SS benefits as a legal worker with a legal SSN. The only difference is that the person who worked illegally must receive those SS benefits outside of the USA.

In 2006 the Ensign Amendment was drafted to eliminate this interesting treatment. The bill was defeated in the Senate by a 49-50 vote. Senator Leahy (D.Vt.) said at the time:

“We should not steal their funds or empty their Social Security accounts. “That is not fair. It does not reward their hard work or their financial contributions. It violates the trust that underlies the Social Security Trust Fund.”

Goss put a number of $240b as of 07 out there. I took that estimate and extrapolated where it might be today. I came up with 1/3 of a trillion. What might be the future liabilities of SS regarding this? About $500b. Should that be the result, that amount MUST be paid (and spent) outside of our borders. This makes no sense to me. None of it does. But that is the way it is.

My original post was bashed to pieces at another site, Angry Bear. There were some interesting comments that I participated in. A lady that works for SS made some important contributions. She had a fair bit to say. She explained how the SSN’s are illegally obtained. She describes her role in facilitating payments to beneficiaries who worked in the US illegally and that used fraudulently obtained SSNs. The AB site does not like me and what I write. Neither do their contributors. The lady who made available the clarifying information does not like me much either. Her final thoughts:

Sir, give this up. It is dishonest, misleading and wrong to do what you are doing. I am finished writing to you on this subject.

The entire discussion can be found here. Some cut and pastes from the comments section:

SS does not keep track of benefits paid by beneficiary immigration status. That is because as far as the program goes, it doesn’t matter. Earnings in, benefits out. To emphasize, it is perfectly legal for a person to receive SS benefits on wages earned while in the country illegally as long as the person receives those benefits outside the US. It has always been legal as far as I know. I was hired as a bilingual speaker of Spanish to process these claims and did so personally or in a supervisory capacity.

They (SS) hired me to take claims from people who were insured for benefits, illegal or not. Then, of course, people can go home and get checks. This is LEGAL. Believe it or not, perfectly legal. If Congress had intended to, it could have passed a law making all those quarters of coverage disappear. But, they didn’t and they haven’t and I’d be surprised if they ever do.

Again, the real kick in the pants is that the money MUST be paid out of the country. Who says America does not have great legislators and great laws? No wonder we are becoming second rate.

Comments

  1. Goss confirmed that as of 2007 SS had collected as much as $240b from undocumented workers.

    The comment over at Zero Hedge about the effect of the Earned Income Tax Credit is pretty acute. The amount of real cash actually put into the SSTF by illegals will have been much lower than $240 billion.

    http://en.wikipedia.org/wiki/Earned_Income_Tax_Credit#Cost

    According to that EITC was possibly as high as $36 billion in 2004, plus unqualified EITC payments. How much of the potential 1/3 trillion SSTF liability was initially seeded by EITC credits is unknown. But is certainly a significant fraction of the total.

    In the case of self-employed “poor” the first application of the EITC credit is to pay self-employment taxes.

    “Anon of SS Means Testing & Rare Earth Metals”

  2. ps The SS Admin might not even have the numbers. From their viewpoint SE tax “paid” with an EITC credit appearing on a 1040 will be the same as SE tax paid with a check attached to a 1040.

    The IRS however should know what the numbers are. From that point a reasonable SWAG should be possible of the total amount of Illegal SSTF liability originally created by the EITC mechanism.

    It would interesting to know these numbers for “legal” immigrants of recent decades, too.

  3. If – correction : I mean : When – the US is to implement a selective default on its obligations due to its excessive indebtedness, this one is going to be the low hanging fruit !

  4. this one is going to be the low hanging fruit!

    It will be? One would think that with official U6 unemployment/underemployment pegged at 16.7% that enforcement and deportation of illegals would be “low hanging fruit”, too. Especially for a party that pretends to be in favor of “labor” on the campaign trail.

    But it isn’t. Never, ever underestimate the capacity of NYC/Washington DC elites to spit in the faces of real Americans – their nominal fellow citizens – and laud themselves as morally upright for doing so.

  5. Every time I read an article from you about SS I get even more pissed! Washington sucks!

    DS

  6. I’m speechless, agape, hardly able to type.

    In any other legal context I can think of, the remedy of “unjust enrichment” would not be available to a plaintiff who knowingly did the unjust enriching through fraud. Which is what illegals do when they “appropriate” someone else’s SSN to get a job.

    And, the “out of country” requirement escapes me, as well. Does the U.S. think it’s better for them to spend the money elsewhere? Really?

    So Bruce, when I get those cheerful SSN statements every so often, telling me I’ll be collecting Zillions every month, after I retire, should I check to see if someone has “stolen” my SSN and inflated my contributions with his wages? If I file for SSN benefits before the illegal does, will I have to pay back the extra?

    Are you sure you’re not pulling my leg?

    Wow. What a country.

  7. ONLY COMMENT IS VOTE ANTI INCUMBENT IN NOV REGARDLESS OF PARTY….. THEY ALL MUST GO….PARASITES.

  8. But What do I Know? says:

    Hey, Bruce, don’t let the Angry Bear people get you down–they seem very pedantic and prone to name-calling. . . Your comments on SS are some of the best I’ve seen.

  9. WDIK:

    I love to fight with Angry Bear. They are the NRA for SS. B. Webb, who wrote the piece is a very knowledgeable guy. I don’t agree with him often, but I respect his opinion.

  10. The answer is that an illegal worker using an illegal SSN has the same rights to SS benefits as a legal worker with a legal SSN.

    Which is none.

    No one, no matter how much has been paid in, or for how long, has any entitlement whatsoever to SS benefit payments. None. The courts have ruled definitively on this.

    The dirty little secret about SS is this: It’s just a tax. Nothing more. A tax that Congress levies and spends as it wishes; the so-called ‘Trust Fund’ is evidence of this — i.e. the money has already been spent.

    The law regarding collection of taxes (‘contributions’) and payment of benefits can be changed at any time.

    So all Congress has to do is change the law to deny benefits to illegals. Which is what ought to be done, regardless of whether some people find this ‘fair’ or not. I’ll concede the point: it isn’t ‘fair’. But there has to be some cost to coming and working here illegally. This is one of the costs. And the US ought to publicize this wide and far on the chance that it might deter some people from coming to the US illegally.

  11. Not to be contrarian, but…. I get that the illegal immigrants illegally acquired the SS# and thus illegally acquired the job(s) that created this little conundrum. Does that make it right for us (the US I guess) to keep that money? It’s not ours, right? They worked for it, they earned it – it should be theirs, right?

    Two wrongs don’t make a right and all that.

    I do get that there are difficulties in determining how much the person earned on the illegal SS# (as opposed to the rightful owner).

    I also get that paying the wages out of the country is bothersome too – but would you prefer they be paid in country and that illegals somehow had to reside here or work out some other loophole? I’m not sure that is a better solution.

    In short, we’re the USA, we are supposed to be the guiding light of equality and democracy in the world. Let’s take the high road as often as we can.

    Don’t forget, immigration (legal and illegal) built this country (and continues to do so) more so than any other country/state in history.

  12. Again, the real kick in the pants is that the money MUST be paid out of the country.

    “Again”, this is bullshit. All Congress has to do is change the law.

    And you are wasting your time dealing with the socialist redistributors over at “Angry Bear”. The main contributors over there support SS (more or less rabidly) out of political conviction, and have made it abundantly clear that there isn’t any problem with SS that more taxes won’t fix.

  13. eh said…
    The answer is that an illegal worker using an illegal SSN has the same rights to SS benefits as a legal worker with a legal SSN.

    “Which is none.”

    That is not what the courts said. The courts said that Congress could change the law. Until Congress does change the law there is a claim.

  14. @cprouty; “In American we are supposed to be the guiding light of equality and democracy in the world”

    I am sorry prouty, I didn’t get that memo, nor did I read it in the Declaration of Independence or Constitution..

    Everyone has their own religion and you are certainly entitled to preach your religion of transcendental Americanism. What you and your co-religionists are not entitled to do is take my tax money and use it as charity. My church collects it’s own donations, it does not stick it’s hand into the taxpayers’ pockets to fund its religious benevolence. I suggest you and your church members do the same. Support your own wetbacks.

  15. “To emphasize, it is perfectly legal for a person to receive SS benefits on wages earned while in the country illegally as long as the person receives those benefits outside the US.”

    No, it is not really “perfectly legal”. Using a false SSN is a felony, punishable by up to five years in jail and a $250,000 fine.

    So what is meant here is “Assuming that the government does not bother to prosecute the illegal for the crime of using a fake SSN, then the law as currently written states that they are entitled to the benefits they illegally obtained”.

  16. >”I do get that there are difficulties in determining how much the person earned on the illegal SS# (as opposed to the rightful owner).”

    What you don’t seem to get is that one of the “difficulties” is that using somebody else’s SSN is a felony. So one of the things you are arguing for is that illegals should not be prosecuted for a crime which would get an American citizen in big trouble.

    But that’s just one one of the difficulties associated with America’s “peculiar institution” of massive illegal immigration.

    >”Don’t forget, immigration (legal and illegal) built this country (and continues to do so) more so than any other country/state in history.”

    Your knowledge of history is non-existent. Where do you think Anglo-Saxon England came from? Apart from a few places in Africa, every place on Earth is populated by immigrants.

  17. ?”In short, we’re the USA, we are supposed to be the guiding light of equality and democracy”

    Then maybe we can start setting our example to the rest of the world by acting less like a fabulously corrupt banana republic and actually enforcing the law equally and impartially for a change.

    If illegals were prosecuted for their illegal behavior as zealously as citizens are, there would be very few illegals in the country.

  18. Isn’t misprision of a felony still a crime? Why are these bureaucrats who have every reason to believe that a felony has been committed and do not report it not arrested as accessories and for misprision??

Trackbacks

  1. [...] It is, however, completely proper for illegal workers to obtain Social Security benefits. Any illegal workers who have contributed to SS (FICA taxes) for a minimum of 10 years are eligible to receive retirement benefits on the same schedule and terms as an individual who works legally.  I was shocked to learn this, but it is true (Link). [...]

  2. [...] It is, however, completely proper for illegal workers to obtain Social Security benefits. Any illegal workers who have contributed to SS (FICA taxes) for a minimum of 10 years are eligible to receive retirement benefits on the same schedule and terms as an individual who works legally.  I was shocked to learn this, but it is true (Link). [...]

  3. [...] However, it is completely legal for an illegal worker to obtain Social Security benefits. Illegal workers who have contributed to SS (FICA taxes) for a minimum of 10 years are illegible to receive retirement benefits on the same schedule and terms as an individual who works legally. (Note: I was shocked when I first learned this, but it is true {Link}). [...]

  4. [...] However, it is completely legal for an illegal worker to obtain Social Security benefits. Illegal workers who have contributed to SS (FICA taxes) for a minimum of 10 years are illegible to receive retirement benefits on the same schedule and terms as an individual who works legally. (Note: I was shocked when I first learned this, but it is true {Link}). [...]

  5. [...] However, it is completely legal for an illegal worker to obtain Social Security benefits. Illegal workers who have contributed to SS (FICA taxes) for a minimum of 10 years are illegible to receive retirement benefits on the same schedule and terms as an individual who works legally. (Note: I was shocked when I first learned this, but it is true {Link}). [...]

  6. [...] However, it is completely legal for an illegal worker to obtain Social Security benefits. Illegal workers who have contributed to SS (FICA taxes) for a minimum of 10 years are illegible to receive retirement benefits on the same schedule and terms as an individual who works legally. (Note: I was shocked when I first learned this, but it is true {Link}). [...]

  7. [...] However, it is completely legal for an illegal worker to obtain Social Security benefits. Illegal workers who have contributed to SS (FICA taxes) for a minimum of 10 years are illegible to receive retirement benefits on the same schedule and terms as an individual who works legally. (Note: I was shocked when I first learned this, but it is true {Link}). [...]

  8. [...] However, it is completely legal for an illegal worker to obtain Social Security benefits. Illegal workers who have contributed to SS (FICA taxes) for a minimum of 10 years are illegible to receive retirement benefits on the same schedule and terms as an individual who works legally. (Note: I was shocked when I first learned this, but it is true {Link}). [...]